Otolaryngologists Prepare for the Era of Accountable Care Organizations (ACOs)

After a few rough patches, public and private efforts to establish accountable care organizations (ACOs) are gaining speed.

Since 2011, the Centers for Medicare and Medicaid Services (CMS) has initiated or expanded several demonstration projects aimed at improving patient outcomes and containing costs by encouraging provider groups to assume shared responsibility for a defined pool of patients. Prominent medical organizations panned an initial draft of a CMS project called the Shared Savings Program, but the agency won over most critics with a well-received final version of the rules that provided more incentives for groups to form their own accountable care organizations. Last fall’s presidential election provided further clarity about the future of health care reform, and medical groups around the country are now readily jumping on the ACO bandwagon.

Few medical groups have enough data to suggest whether their varied approaches to managing patient populations will lead to better quality care that’s also more affordable, and even the precise definition of an ACO remains a moving target. But industry analysts say they’re surprised and encouraged by the speed with which the movement has taken flight, the breadth of models being investigated, the strong engagement of the private sector and a spreading sense of cautious optimism.

So far, few otolaryngologists have had direct experience with ACOs, many of which are initially focusing on specific, high-risk patient populations and haven’t yet developed performance standards relevant to otolaryngology. As the health care delivery model evolves, expands and better defines the role of specialists, though, several observers say they expect an increasingly broad swath of providers to be added to the mix. And with the model’s maturation, they say, otolaryngologists may play an active role in shaping the future of accountable care.

Getting Up to Speed

Now is the time to engage, said Michael Coppola, MD, associate clinical professor of medicine at Tufts University School of Medicine in Boston and chief medical officer at NovaSom, Inc., a Glen Burnie, Maryland-based company that develops home testing and evaluation for obstructive sleep apnea. “I think that all specialists—and ear, nose and throat surgeons are clearly part of that—need to understand what is valued in the future versus what was valued in the past, and position themselves in an opportunity to add value and to be recognized for that,” he said.

Whereas the fee-for-service system valued intensity of service, future rewards may hinge on a combination of efficiency and quality improvement. “So people are going to be more focused not on, ‘What did you do?’ but on, ‘What happened to the patient as a result of that? What was the outcome?’” Dr. Coppola said. More broadly, he added, ACOs will increasingly ask such questions about the health outcomes of populations, not just about the fate of specific patients.

The CMS-run Shared Savings Program, which requires a low level of financial risk in exchange for a modest level of shared cost savings, is proving to be an especially popular population health management initiative. In all, several hundred organizations submitted applications to take part in the program’s second and third rounds, which began July 1, 2012, and Jan. 1, 2013, respectively. “We’re pretty happy with where we are with the program,” said John Pilotte, director of the Performance-Based Payment Policy Group in the Center for Medicare.

Last January, another 32 groups joined Medicare’s Pioneer ACO program, designed for more experienced organizations. The groups assume more risk and, in return, are more handsomely rewarded for meeting benchmarks. All told, the tally of confirmed ACOs in the United States reached 449 by mid-March, according to Leavitt Partners, a Salt Lake City-based health care consulting firm tracking the growth of accountable care (see “A Sampling of Major ACO Programs,” p. 22). David Muhlestein, an analyst with Leavitt Partners, said private and public-privage hybrid ACOs now account for roughly half of that total, a trend driven by their ability to experiment with different approaches and more easily track costs through clearly defined patient populations.

ACO participants have varied widely in the effort required to get up to speed. “Some people have said they haven’t had to make any major changes to their organization, while some people have had to drastically rethink how they provide care,” Muhlestein said. In general, many of the former have had the luxury of working within relatively integrated facilities and building upon existing frameworks, whereas many of the latter previously toiled in silos and are now scrambling to establish more cohesive working relationships.

Joane Goodroe, an Atlanta-based health care consultant, said success may require a streamlined strategy that gets an ACO up and running and then allows a provider group to gradually add to it rather than wait until all of the right pieces fall into place. “The execution of the concept is so different than what we have done in health care to date that it’s going to have to be a strategy that is either well-funded or sustainable because they’ve used resources as carefully as possible to maximize where the dollars are spent,” she said.

Integrating Specialists

The Pioneer ACO demonstration has proved a good fit for organizations such as Phoenix-based Banner Health Network, which decided “to transform itself into more of a value-based, performance-based provider,” said Chris Coleman, its chief financial officer. Banner’s ACO, which serves about 50,000 beneficiaries, is still setting up needed systems, including a consistent platform for electronic medical records, and working out how best to integrate specialists into its model. Even during the building phase, however, Coleman said company officials have been pleasantly surprised by the ACO’s positive effect on utilization, patient care and apparent savings.

Charles F. Koopmann, MD, associate chair and professor of otolaryngology at the University of Michigan in Ann Arbor, cites multiple areas of potential cost savings within otolaryngology. Improved efficiencies in the diagnosis and treatment of otitis media, otitis externa, sinusitis and vertigo, as well as in the use of imaging technology, could all yield considerable savings. Similarly, Dr. Coppola sees a high potential for improved care and efficiency in sleep medicine. Because the specialty is weighted heavily toward in-facility testing, in sleep labs, he said, doctors aren’t reaching enough patients, the per-patient cost is too high and too few resources have gone into nonsurgical treatments.

The cost consequences of an untreated condition like sleep apnea (the medical focus of NovaSom, Inc.) can be enormous given the increased risk for diabetes, heart disease and stroke, Dr. Coppola said. Unlike a medical insurance company, he said, an ACO acting as regional care provider might be able to adopt a longer-term solution that includes more preventive medicine. “I think there’s a huge opportunity for people who are proactive, who are forward-thinking, to develop new ways of approaching things, and take the system that we have and make it a higher-quality, more efficient system,” he said.

Figuring out exactly how to involve otolaryngologists, however, is still very much a work in progress. Dr. Koopmann, for example, wondered how easy it would be for specialists to join an ACO and whether a leading otolaryngologist in a smaller market could join more than one. If so, how would that specialist’s performance metrics be scored? And if an otolaryngologist sits down with a pediatrician to develop criteria for the proper diagnosis of otitis media but isn’t the first provider to see such patients, how should an ACO view that specialist’s contributions? “Even though I’ve helped them set up the standards, how do I get rewarded—or potentially not rewarded—if there’s improvement in whatever metrics have been put forth?” Dr. Koopmann asked.

A few potential templates for how to proceed are beginning to emerge. Dr. Coppola, unlike most other otolaryngologists, has had experience as both a provider and board member in two ACOs—one that contracted with large commercial payers and a second that functioned as a managed Medicare plan. As a group, he said, the physicians were better able to solve population health problems. The ACOs also yielded enhanced revenue for the doctors and led to higher professional satisfaction for both the providers and office staff due to a perception that they were working as a team to create solutions.

Importantly, both ACOs solicited input from specialists in developing disease management programs for the entire organization. For an initiative on reducing unnecessary imaging for back pain, one ACO set up joint meetings with orthopedists, physical medicine and rehabilitation providers and primary care physicians, and then paid them all for their time in developing best practices. “Here’s the punch line: There could be pay-for-performance and upside potential in that situation that says, ‘If we reach certain metrics, both in quality and efficiency, then a bonus will be shared with the specialty group that participated in that area,’” Dr. Coppola said.

Although otolaryngologists may still be paid to perform procedures on a fee-for-service basis, Dr. Coppola sees them taking on more responsibility in helping ACOs decide how to allocate limited resources across an entire population. In other words, more upfront collaboration might contain costs and prevent unnecessary care. “So there’s a great opportunity for a group of otolaryngologists to come together and work with an ACO and develop these medical management plans,” Dr. Coppola said.

In negotiations with any provider group, however, he cautioned that otolaryngologists should push for an emphasis on quality. “I would be very wary of anybody who came and said, ‘Look, we want you to provide care for 90 cents on the dollar,’ and then they walk away and there’s no discussion about quality,” he said.

Making a smooth entry into an ACO may require both time and energy. But, as otolaryngologists find their place in the new era of accountable care, Dr. Coppola said, the new opportunities will be well worth the effort. “I think the message to the otolaryngologist is that you want to be involved,” he said.